Getinge AB Class B GETI B

Getinge: Long-Term Story Intact but Near-Term Uncertainty Persists, FVE Revised Downward

We are refreshing our views on Getinge and reiterate our narrow moat rating. We continue to believe its overall business is moatworthy due to the high customer switching costs in its various sterilization businesses and the razor-and-blade nature of certain products in acute care therapies. Despite near-term uncertainty in profit margins, which are mostly caused by quality improvement spending for cardiopulmonary and cardio assist products, we believe the company should be able to modestly improve its margins once these are resolved. We lower our fair value estimate to SEK 236 from SEK 247 due to slightly lower profit margins and higher capital expenditure.